Incident: The company achieved operating income of 15.56 billion yuan in 23, +18.04% year on year; realized net profit to mother of 74.734 billion yuan, +19.16% year over year. Among them, 23Q4 achieved operating income of 45.244 billion yuan, +19.8% year-on-year; net profit to mother was 21,858 billion yuan, +19.33% year-on-year. The company's performance is excellent.
The tonnage price of Maotai increased steadily, and large single products such as 1935 continued to be sold. In '23, Maotai Liquor achieved revenue of 126.589 billion yuan, an increase of 17.39% over the previous year, and the serial wine series achieved revenue of 20.63 billion yuan, an increase of 29.43% over the previous year. Among them, Maotai sold 42,100 tons in '23, an increase of 11.1% year on year, and the tonnage price increased 5.66% year on year, mainly due to the further release of non-standard products and an increase in the proportion of direct operation. The sales volume of the wine series was 312,000 tons, up 2.9% year on year, and the tonnage price increased 25.74% year on year, mainly driven by the rapid growth of major single products such as 1935. Among them, Maotai's 1935 revenue exceeded 10 billion yuan, Maotai Prince Liquor's revenue exceeded 4 billion yuan, and Han Sauce, Guizhou Daqu, and Lai Mao's revenue each exceeded 1 billion yuan.
Maotai's sales grew rapidly, driving the proportion of direct management to continue to rise. In '23, Maotai's direct management achieved revenue of 67.233 billion yuan, accounting for 45.52%, an increase of 5.37 percentage points over the previous year. The rapid increase in the proportion of direct sales is mainly due to the rapid growth of the iMaotai platform, and other direct sales channels such as supermarkets and group purchases are also steadily increasing. In '23, i-Maotai achieved revenue of 22.374 billion yuan, an increase of 88.29% over the previous year, mainly due to the increase in sales of non-standard products, 1935 and 100 ml Flying Moutai.
The net interest rate continues to rise, and the expense ratio is relatively stable. The company's overall gross profit margin in '23 was 91.96%, up 0.09pct year on year. Among them, the gross margin of Maotai wine decreased 0.07 percentage points year on year, and the gross margin of series wine increased 2.54 percentage points year on year. The gross margin of Maotai wine declined slightly, mainly due to the increase in the direct share of materials in the cost. The sales expense ratio reached 3.09% in '23, an increase of 0.5 pct over the previous year, mainly an increase in advertising and market development expenses; the management expenses ratio reached 6.57%, a year-on-year decrease of 0.6 pct. Mainly, employee salary expenses were slower than revenue growth.
Company profit forecast and rating: Looking ahead to 24 years, the company will guide revenue growth of about 15%, giving the market strong confidence in growth. In November of last year, the company adjusted the price of Feitian/Five Star. It is expected that the price increase will contribute 5-6% to sales revenue. Coupled with the continued growth in non-standard product launches, the further volume of direct sales channels, and the continued high growth of the series wine series, the company can be expected to maintain steady growth. We expect the company to achieve a 15.1% year-on-year increase in sales revenue and 17.73% increase in net profit to mother in 2024, corresponding to EPS of 70.04 yuan. The current stock price corresponds to 23.73 times the valuation. Considering Maotai's historical valuation level and the certainty of performance growth, we gave a target valuation of 30 times, a target price of 2,101 yuan, and gave it a “highly recommended” rating.
Risk warning: Macro consumption recovery falls short of expectations, market competition is too intense, company product structure improvement falls short of expectations, etc.